Market update

As the crypto sector continues to evolve, June opens with a mix of historic milestones and cautionary signals. From Bitcoin reclaiming its all-time high to Circle’s long-awaited IPO, the intersection between digital assets and traditional finance is deepening. Meanwhile, concerns over data security, US debt stability, and macroeconomic pressure on the dollar highlight the complexity behind today’s market dynamics.

Financial markets are navigating an exceptionally dynamic period, shaped by diverging forces: from escalating trade wars and sweeping tariff measures to transformations in both the private credit markets and the crypto sector. The recent Trump tariffs, with up to 54% on China, are triggering a global economic shock. At the same time, private credit has reached a record $2 trillion in AUM and crypto lending has seen remarkable 250% growth over the last two years.

The start of 2025 has been marked by significant developments across both the cryptocurrency and traditional financial markets. Bitcoin has demonstrated remarkable strength with an 8% appreciation in January, while Ethereum maintains its strategic position in the market. The regulatory landscape continues to evolve, with the SEC implementing new accounting standards that promise to enhance institutional cryptocurrency adoption. Meanwhile, the stablecoin market has reached a notable milestone, surpassing $200 billion in total market capitalisation.

As we approach the end of 2024, the crypto asset market has demonstrated remarkable resilience and growth. Bitcoin's impressive +41,47% monthly gain, approaching €95.450, alongside Ethereum's exceptional +47,57% performance, reflects robust market momentum. This strength is further evidenced by unprecedented U.S. Bitcoin ETF inflows reaching $6,2 billion in November, while significant developments in the political landscape, including key appointments in the incoming administration, continue to shape the market's trajectory. Meanwhile, Europe faces its own challenges, particularly in France, where mounting fiscal pressures have led to market uncertainties reminiscent of the 2012 Eurozone crisis.

October 2024 continued the "Uptober" trend, marking the tenth out of the twelfth October month that closed with a positive gain for Bitcoin since 2013. The past month was particularly noteworthy as Bitcoin surpassed its all-time high (ATH) in euros. Subsequently, the Bitcoin price broke its ATH again this morning as a result of the US elections, with a record price of €70.130. Another significant development this month was the acquisition of Bridge, a payments platform built with stablecoins, by Stripe for $1,1 billion.

Since January 1st, the aggregate supply of stablecoins has surged by an impressive 30%. This substantial increase clearly demonstrates investors' strong preference for stability in volatile markets. Stablecoins have reached a record all-time high of $160 billion, unmistakably signalling the industry's robust and growing demand. The rapid development of Decentralised Finance (DeFi) is undoubtedly one of the key drivers of stablecoin adoption. Despite regulatory challenges and occasional market fluctuations, investor sentiment towards stablecoins remains unwaveringly strong.

The market has entered a downward trend since reaching its historic peak in March. This development is not unexpected given the significant increase of 300% since early 2023. A notable shift compared to the situation in March is that long-term investors are now accumulating Bitcoins again, rather than selling them. This dynamic contributes to an increasingly positive market sentiment.

The active management of Bitcoin holdings by Mt. Gox, the German State of Saxony, and the U.S. government led to significant selling pressure over the past month. In addition, poor stock market performances in Asia and America have caused the crypto market to show deep red figures in recent days. The limited liquidity of cryptocurrencies continues to result in volatile market movements. With MiCAR, the new EU-wide crypto regulation, consumer protection will become part of the oversight. All European crypto companies are currently concerned about this new regulation, which will take effect on the 30th of December for crypto service providers. As of the 1st of July, MiCAR already applied to stablecoins, which now fall under supervision and must be licensed. The first MiCA-regulated stablecoin is offered by Circle, best known for USDC and EURC.

The Bitcoin price has experienced ongoing volatility since our previous market update, marked by several steep corrections. One of the causes might be the news surrounding Mt. Gox, as it was announced that the long-lost bitcoins will be distributed to rightful owners sometime this month. In 2014, Mt. Gox was the leading Bitcoin exchange with 70% of all Bitcoin volume. More selling pressure might come from Bitcoin miners, as the total Bitcoin supply held by miners shows a significant decrease.

On April 20 at 2:09 AM, the 840.000th Bitcoin block was mined, marking the fourth Bitcoin halving. The inflation of Bitcoin has now been halved for the next four years, from 900 to 450 new bitcoins per day. Due to this special event, the pressure on the Bitcoin network temporarily increased, causing transaction fees to rise to €200 per transaction. Within a few days, this normalised, and transaction fees have since dropped back to less than €1.